In re: Gloria Dean Wells
CC-16-1319-LSTa
| 9th Cir. BAP | Oct 10, 2017Background
- Debtor Gloria Dean Wells filed Chapter 7 on November 20, 2015, listing her Los Angeles residence (the Property), a Chase consensual lien (~$250,314), and a $175,000 California homestead exemption.
- Debtor moved under 11 U.S.C. § 522(f)(1)(A) to avoid Michael Griffith’s judgment lien (~$40,527), submitting an appraisal (May 2015) valuing the Property at $325,000.
- Griffith opposed, claiming the appraisal was outdated and later submitted a January 2016 CMA and an April 2016 appraisal valuing the Property much higher ($505,000; later adjusted to $470,000 as of the petition date).
- The bankruptcy court ordered appraisals tied to the petition date (Nov. 20, 2015); Debtor’s updated appraiser (Turner) opined $360,000; Griffith’s appraiser (Walsh) opined $470,000 for the petition date.
- At an evidentiary hearing both appraisers testified; key factual dispute centered on deferred-maintenance adjustments (Turner: substantial repairs and larger deduction; Walsh: fewer defects and much smaller repair estimate).
- The bankruptcy court found the Property’s fair market value at $360,000 as of the petition date, concluded Griffith’s lien impaired the homestead exemption, and avoided the lien; Griffith appealed asserting due process and valuation errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Griffith was denied due process by improper service and late notice | Service on wrong address deprived him of timely notice and rights; case or motion should be dismissed/denied | He learned of the case, filed opposition, participated fully, and waived jurisdictional objections by appearance | No due process violation; he participated, waived service defects, and was given meaningful opportunity to be heard |
| Whether Debtor’s initially outdated appraisal required denial of the §522(f) motion | Debtor’s appraisal was outdated and insufficient to meet burden | Court continued to allow updated, date‑specific appraisals; parties agreed/participated in continuances | Court did not abuse discretion in continuing; updated appraisal was admitted and considered |
| Whether the bankruptcy court erred in excluding Griffith’s additional exhibits and evidence of neighborhood appreciation | Excluded exhibits would show comparables were outside Leimert Park and market was appreciating | Court limited exhibits to appraisals per prior notice; Griffith cross‑examined and recalled witnesses | No reversible error; court allowed cross‑examination and recall; evidence of stable market was elicited |
| Whether the court clearly erred in accepting Turner’s large adjustment for deferred maintenance (reducing value to $360,000) | Turner’s $125,000 deduction was excessive and unsupported | Turner’s deduction included repairs plus quality/style adjustments and was supported by photos/testimony; factual dispute for finder of fact | No clear error; factual finding plausible and supported — court’s valuation affirmed |
Key Cases Cited
- DeLuca v. Seare, 515 B.R. 599 (9th Cir. BAP 2014) (standard for reviewing due process issues)
- HSBC Bank USA, Nat’l Ass’n v. Blendheim, 803 F.3d 477 (9th Cir. 2015) (notice adequacy as mixed question of law and fact)
- Retz v. Samson (In re Retz), 606 F.3d 1189 (9th Cir. 2010) (clear-error standard for factual findings)
- Anderson v. City of Bessemer City, 470 U.S. 564 (U.S. 1985) (deference to permissible factual inferences)
- Tennant v. Rojas (In re Tennant), 318 B.R. 860 (9th Cir. BAP 2004) (right to notice and hearing in bankruptcy matters)
- Matthews v. Eldridge, 424 U.S. 319 (U.S. 1976) (due process requires meaningful opportunity to be heard)
- Benny v. Pipes, 799 F.2d 489 (9th Cir. 1986) (appearance/participation can waive service/personal jurisdiction defenses)
- United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (scope of appellate review of factual findings)